SunRice in no hurry to list on ASX

SunRice boss Rob Gordon says he will not be rushed into a possible listing of Australia’s grain export monopoly, despite the growers acknowledging the need to accelerate growth.

For the past two years the company has been reviewing its capital structure, which could include a listing on the Australian Securities Exchange.

Mr Gordon said he had no timeline for completing the review and would not present any speculative models to SunRice’s grower shareholders, saying they “deserved better".

His comments came after the ­company posted a 6.4 per cent slide in net profit to $33.5 million for the 12 months to April 30.

Despite the profit drop, Mr Gordon said the company had continued to strengthen its balance sheet after ­recovering from the worst drought to hit the NSW Riverina in 100 years.

“It’s the third year post drought and the third year that we have delivered an NPAT of the early 30 [million] mark," he said, adding that SunRice had slashed its debt levels from about 61 per cent in 2012-13 to 44 per cent.

At the same time, it has grown revenue by 7.7 per cent to $1.15 billion.

Mr Gordon said that meant there was “no pressing need" to rush the review of its capital structure.

Related Quotes

Company Profile

“We have said to shareholders that until we get a scheme that meets all of our objectives and requirements of the regulators, we won’t be putting something in front of them on a ­speculative basis, because we think they deserve somewhat better than that," he said. “Our gearing is very, very ­manageable so our net debt is way down, so therefore we don’t have a pressing balance sheet issue."

Still, Mr Gordon said the restructure had been “testing the minds" of company executives and their advisers, Macquarie Group, with the company adamant it will retain grower control while seeking access to more liquid ­capital markets.

He said the company had been “inspired" by elements of the listing of the world’s biggest dairy exporter
Fonterra
in 2012.

The milk processor adopted a­ ­“trading among farmers" scheme, which allowed farmers to buy or sell shares among themselves instead of through the co-operative. It also issued non-voting scrip to non-farming ­investors, to retain farmer control.

“While we are not completely the same as Fonterra . . . we see the Fonterra model and models like it as being good places to take inspiration," he said.

Mr Gordon said he has also examined
Bega Cheese
, which listed on the ASX in 2011, with its constitution preventing any shareholder owning more than 10 per cent of the company.

He said there was positive feedback from SunRice’s grower shareholders, who said that “if we aren’t going forward then we’re going ­backwards".

"They understand the need for liquidity to accelerate the growth in the business and fund it," he said.

"But they wouldn’t want to ­­com­promise their control and ownership of the business in order to get that liquidity. And that’s the issue, how do you pull both of those things off."